Currently, you can't direct searches within nested folders. You either search all messages, or search within one folder/label. So for example, I have e-mails grouped by project, and within big projects there are sub-labels:
project1/testing
project1/doc
project1/proposals
...
project2/testing
...
If I search in "project1", it doesn't look in any of those sub-folders.Search also could use a grep-like capability. The "advanced search" options are a bit of a joke, especially coming from a company that cut its teeth on search.